“At the start of the pandemic there was just a lot more uncertainty than we have now. We’re at the point now where we can see the light at the end of the tunnel,” he says. “I think there’s a general perception that banks just punt on this stuff. And they don’t.”
Even if weary lenders eventually enact a financial reckoning on bad loans, discounts may not be as drastic because of the deep pool of buyers. Private real estate funds targeting opportunistic and distressed assets were sitting on nearly $125 billion ready to be deployed at the end of December, 50 percent more than the dry powder available at the end of 2010 coming out of the financial crisis, according to financial data tracker Preqin.
Those buyers and potential sellers agree travel will come back with a vengeance, but they’re not on the same page as to when or how bad their losses would be in the interim. That’s leaving a sizable gap between what either thinks hotels are worth today, says Jim Costello, senior vice president at RCA.
“If I’m an owner knowing that six months from now we may be back to normal . . . unless